On January 29, the Iraqi government revoked the operating license of Blackwater Worldwide, the company with the largest private-security force in Iraq. The move reflected Iraqi outrage over a Baghdad firefight that broke out in September, 2007, after which Blackwater personnel stand accused of killing 14 Iraqi civilians, and injuring at least twenty more, without provocation. Five Blackwater contractors currently face a 35-count federal indictment for voluntary manslaughter, involuntary manslaughter, and weapons violations; a sixth has pled guilty to voluntary manslaughter and attempted manslaughter.  
The Blackwater five have been charged under a 2004 expansion of the Military Extraterritorial Jurisdiction Act, which now provides, among other things, for  private contractors to be prosecuted in U.S. federal court if  the contractors are supporting the mission of the Department of Defense as opposed to, say, the Department of State, which Blackwater is still officially under contract to protect.

To realize that prior to this case, some 100,000 civilians had been circulating in a war zone, armed with both deadly weapons and impunity, is to welcome any kind of legal screw-tightening. But at the same time, the change to the 2004 law, which made private security forces at least somewhat accountable, also blurred the line between military and civilian in troubling ways.  Whatever their legitimate culpability, the Blackwater defendants may end up being punished, in part,  for violating machine-gun  laws that were passed in mind of the drug war in urban America, not guerrilla war in urban Iraq. There is something unsettling about that.
Weird, too, is how this whole pseudo-military hodgepodge looks on the ground to Iraqis.  Seeing all these foreigners, armed but not uniformed, speeding along in armored but unmarked vehicles, confuses people as to who the hell everybody is. I remember Iraqis telling me, early in my tenure there, that the American army was full of people who weren't American. Taking this as a teachable moment on the topic of democratic diversity, I helpfully pointed out that soldiers might look African, Asian, Hispanic, even Arab -- but they were all Americans. Then I realized they were talking about the mercenaries from South Africa, Nepal, and everyplace else.
Confusion is not confined to places that the U.S. actually occupies. The U.S. is not, for instance, currently engaged in conflict in West Africa. But Blackwater is. Ask any local there whether there are American soldiers fighting in his country, and I guarantee you the answer will be “Yes.”
Despite the obvious hazards, private security in war zones, including Afghanistan, is here to stay. Consequently, if Blackwater leaves, it will be replaced. By whom?
Most likely by similar men under different hire. In Iraq, I met more than a few security guards  who were eminently smart, sane, and well trained;  who got no kick out of killing, and had a truly idealistic view of their role in protecting the people who are trying to rebuild Iraq.   I also met plenty of nutcases, along with nice guys who had just arrived from some sheriff's office in Wherever and were already in way, way over their heads.
Then again, even a perfect security specimen would be challenged in such an environment.  According to the Blackwater defense team, “These young men were fighting for their lives in a crowded, dangerous and chaotic environment.  It is an unfortunate fact of war that in a country where terrorists and insurgents hide behind civilians to attack U.S. personnel, civilian casualties will result.” 
Exactly. It's a war. That's why it should be left to warriors, who at least theoretically have standard training, equipment, procedures – and punishments. Various security companies don't even have a way to identify themselves out in the field. In August 2004, I rode from Baghdad to Kuwait and back in a weapons-laden truck with a security guard named Wolf Weiss. (He was subsequently killed.) Some of the hairiest moments of the ride occurred when another truck  slowed down near us. Neither driver had any way of knowing whether the other was a fellow security operator, a harmless civilian or an attacker.
Even now, after nearly six years in Iraq, it's still not clear who answers to whom for what. In the end, though, the essential flaw in military privatization is rooted in its most fundamental appeal. If all the tasks currently undertaken by private security firms were performed by the military, up-front expenditures would be a whole lot higher.  Official casualty counts would be a whole lot grimmer.  Our armed forces would be stretched a whole lot thinner. And all that would make lying to ourselves about the real costs of war a whole lot harder.